Agencies Near Rescue Plan
For Yield-Burning Victims

Securities regulators are close to finalizing a plan that would bail out thousands of bondholders who could be hurt by ripple effects from alleged "yield-burning" abuses in the municipal-bond market.

Yield burning occurs when underwriters slap excessive mark-ups on securities used to complete complex municipal-bond deals known as advanced refundings. Why is it called yield burning? Because by marking up bonds, underwriters are burning down yields, which move in the opposite direction from prices. Investors across...